The Trump administration has begun the hard work of moving federal government policy toward market-affirming policies and away from the progressive tax-spend-debt madness of the Biden years. Unfortunately, the economy may require a much bigger rescue than is politically possible – or perhaps even economically possible.
The fact that the American people have always been an incredible engine of wealth production has provided the nation’s government with an irresistible temptation to increase spending at all times. It is a simple moral hazard: the unmatched prosperity-generating ability of America’s free-enterprise system tempts members of the government to think they can dream as big as they want in their quest to buy votes.
That was exactly what we experienced in 2021 through 2024, which built on trends established earlier this century. Federal debt doubled as a percentage of gross domestic product from 2009 to 2025. It is now at a peacetime record of 122% and rising rapidly.
With federal government debt projected to increase from the current $36.9 trillion to $54.4 trillion in 2034, the upward pressure on interest rates and concomitant suppression of private investment is sure to collapse the economy, greatly reduce federal tax revenues, and bring defaults on government debt, Social Security and Medicare, plus an inability to fund other entitlements, defense, and everything else the government does, sometime in the next few years.
Regardless of whether those defaults arrive through open repudiation, renegotiation or inflation, they will do incalculable damage to the U.S. government and the nation’s economy.
A household or business facing such a dire prospect would immediately take measures to avert it, including spending less, earning more if possible, and selling off assets to pay down the debt; the alternative being bankruptcy and the loss of those very assets. If the federal government were to come to its senses, it would start by cutting spending (by at least $2 trillion per year) and increasing revenues (by lowering tax rates and reducing regulation).
We’ve seen how unwilling Congress has been to do that. Failing that, selling assets remains the other major option.
Unfortunately, that would not raise much money. Land and transportation policy analyst Randal O’Toole estimated in 2020 that selling all (politically) possible federal lands and the oil, natural gas, and coal on them would bring in at most $3.7 trillion. That would cover less than 14% of the 2020 federal debt, and we’re on track to add another $30 trillion to that in the next decade.
In addition to land and the resources on it, the Federal Reserve estimates the national government’s other assets are worth $9.29 trillion. Of course, many of those assets are probably not in a sellable condition or things that anybody would want at the estimated price.
The $13 trillion that we would hope to raise by selling all those properties would not even pay for all the debt scheduled to be added between now and 2034, falling $4.5 trillion short. In addition, selling all that property would be a one-time deal, so the $13 trillion debt reduction would not be repeatable later if (when) the government goes on its merry way imagining once again that the American people are an unlimited source of bounty for politicians’ dreams.
Perhaps in recognition that selling government assets won’t get us very far, the Committee to Unleash Prosperity (CTUP) suggests a smaller land sale and additional measures to pay for more cuts to tax rates, totaling $6.55 trillion. Items include $500 billion from sales of federal land, another $500 billion by ending the state and local tax deduction for millionaires, $2.5 trillion by capping millionaire tax deductions, $1 trillion from a universal 10% tariff, and $700 billion from a ban on state Medicaid taxes.
CTUP’s plan seems to recognize that major spending cuts are not a possibility and that mandatory spending has already become so expansive that only rapid economic growth can possibly put off a crisis, by reducing the annual federal deficit below projections over the next decade. Instead of paying down the debt, CTUP proposes to stop adding to it, which would indeed be an improvement though not a solution.
Unfortunately, even that is exceedingly unlikely. The opposition party and the nation’s press and other institutions would immediately condemn any plan to implement CTUP’s suggested changes as a sell-off of the American people’s precious assets to pay for a massive tax cut for the rich. On top of that, most of the CTUP suggestions are tax hikes themselves, such as the removal of millionaire deductions. That is trading taxes, not lowering taxes.
Even if we measure the nation’s debt against the total assets of the American people, the number is daunting. Estimates of the entire net worth of the United States – assets minus liabilities – range from $120 trillion to $135 trillion. The current debt is almost 30% of that. That is shocking to contemplate.
I do not see any politically plausible scenario in which the U.S. government averts a fiscal crisis and default on the debt, with ensuing social chaos, in the coming years. Looking at all the numbers, the only real solution is obvious: pray for a miracle.
